Chapter 5 (Exam 2)

Question 1

What does a budget provide?

Answer 1

realistic estimates of upcoming revenues and expenses associated with the event. It’s your financial plan and provides financial limitations

Question 2

What are the 5 stages of the budgeting process?

Answer 2

1) gather information
2) forecast sales by looking at historical data
3) project profits and losses
4) compare industry norms
5) determine capital need

Question 3

How are budgetary figures derived?

Answer 3

1) past trends
2) competition
3) professional associations
4) suppliers and buyers

Question 4

What are some less obvious revenue sources?

Answer 4

1) rights fees
2) time buy
3) Barter
4) Syndication
5) Pay-Per-View

Question 5

Rights Fees

Answer 5

Broadcasters pay for rights to broadcast an event or its associated content

Question 6

Time buy

Answer 6

Event property buys air time and broadcasts the event itself

Question 7

Barter

Answer 7

Also known as partnership, it involves a split in advertising revenues between event property and broadcaster

Question 8

Syndication

Answer 8

Event organizers can sell media rights to have their events broadcast simultaneously on multiple television and radio stations

Question 9

Pay-Per-View

Answer 9

Cable or satellite TV providers offer the event and viewers pay provider a fee for right to access event

Question 10

Budget Components (3)

Answer 10

1) revenues
2) expenses
3) Net income or loss

Question 11

Types of budgets (2)

Answer 11

preliminary and working

Question 12

Preliminary Budget

Answer 12

is a work in progress because event organizers continue to gather information and modify the event budget over time

Question 13

Working Budget

Answer 13

becomes a working budget when the estimating process is complete and actual numbers are included

Question 14

Revenues

Answer 14

the top line of the income statement and is referred to as the “top line”

Question 15

Expenses

Answer 15

event organizers need to incur expenses in order to put on the event. It takes money to make money

Question 16

Capital Investment

Answer 16

may purchase physical assets for use over multiple events

Question 17

Controlling Costs

Answer 17

1) find low costs good and services
2) update the spreadsheet throughout the event allows for tracking revenues and expenses in real time. This shows where cost overruns exist
3) limit who makes decisions on spending.
4) implement a system of checks and balances.